Aluminum and steel tariffs: Skyrocketing prices for American businesses and consumers

• Since February 2025, steel prices have jumped 33.9 per cent in the United States.
• Since February 2025, aluminum prices have jumped 58.0 per cent in the United States.

MONTREAL, Oct. 22, 2026 (GLOBE NEWSWIRE) -- The 50-per-cent tariffs imposed on steel and aluminum by the Trump administration have provoked a sharp increase in the prices of these metals in the United States, but have not led to substantial productivity or employment gains. This is the conclusion of an MEI Economic Note published this morning.

“All that the tariffs have accomplished since being put in place is to raise prices for U.S. manufacturing companies that need steel and aluminum,” says Joseph Steinberg, professor of economics at the University of Toronto and MEI Senior Fellow.

Skyrocketing prices and stagnating production

In March 2025, U.S. President Donald Trump imposed 25-per-cent tariffs on steel and aluminum under Section 232 of the Trade Expansion Act of 1962. A few months later, those tariffs were hiked up to 50 per cent.

The effect on prices was soon felt, and since February 2025, the U.S. producer price index for steel mill products rose 33.9 per cent, while the index for aluminum mill shapes rose 58.0 per cent.

For purposes of comparison, for the period from December 2024 to June 2026, Canadian prices for these two categories of products increased by only one per cent and 26 per cent, respectively.

While not formal estimates, these gaps of over 30 percentage points for the prices of both metals from one side of the border to the other give an idea of the size of the tariff effect on U.S. prices.

What’s more, these tariffs did not lead to equivalent gains in production and employment, explains the researcher.

The U.S. steel sector has seen production increase by 7.6 per cent and employment by 0.7 per cent. As for aluminum, production fell by 0.1 per cent while employment in aluminum and other nonferrous metals rose by just 0.6 per cent.

“What can be said beyond the shadow of a doubt is that Trump’s tariff policy has not helped revitalize the industry as promised,” points out Professor Steinberg. “The promised jobs and production have not materialized, and it is American manufacturers of processed goods and their customers who are paying the bill.”

U.S. companies pay a big part of the bill

Steel and aluminum are found in many products we use every day, and are major inputs for machinery manufacturers, automakers, construction firms, and many others.

Manufacturers of fabricated-metal products require about 31 cents of steel and aluminum for each dollar of output, while automakers require about 16 cents.

These industries that depend on steel and aluminum bear the brunt of the cost increases. For example, for automakers, if input requirements were fixed and the metals-price shock passed through fully, production costs would rise 6.5 per cent. For fabricated metals, the increase would be 13 per cent.

From February 2025 to July 2026, metals tariffs also coincided with the loss of 60,000 jobs in U.S. manufacturing, although the relationship was small and not statistically significant.

During the previous tariff episode in 2018, tariffs had contributed to a reduction of downstream production of $3.5 billion in 2021, while production gains in steel and aluminum totalled $2.25 billion.

“High tariffs and uncertain trade policy are the worst-case scenario, as they hurt downstream metal-using firms without producing the incentives for metal-producers to invest,” adds Professor Steinberg.

The real solution is to eliminate barriers in order to encourage investment

Major expansion projects announced since the imposition of tariffs, like the Hyundai steel mill in Louisiana or the aluminum smelter in Oklahoma, will take years to come online.

The most rapid post-tariff response is the restart of idled existing capacity, like Century Aluminum did in Mount Holly, South Carolina, adding roughly 50,000 metric tons of annual production.

If the goal is really to revitalize U.S. steel and aluminum production, the solution is to eliminate regulatory barriers to investment and to simplify the permitting process in order to accelerate the construction of these big projects.

“Each dollar of additional profits earned by protected industries because of tariffs comes from increased prices for the U.S. customers of those products,” concludes the researcher. “Building a strong economy requires favourable investment conditions, not ever-higher taxes.”

You can read the Economic Note here: https://www.iedm.org/wp-content/uploads/2026/10/economic-note-232026.pdf

The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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